Congratulations! You’ve graduated! Now to land that first job on your road to success!
This milestone is certainly a positive game changer in your life, meaning you now have a cash flow, as well as responsibilities. However, there are a lot of decisions and financial organizing that needs to be done as a result of your new income. Take a look at these first job money questions to ask when accepting a position at a new job.
What is the Pay Schedule?
The company you work for has a pay schedule, the predetermined dates in which paychecks are released to employees. Not all employers have the same pay schedule. The two most common pay schedules used by employers are bi-weekly and semi-monthly.
If your employer pays bi-weekly, you will receive your paycheck every two weeks. This adds up to 26 paychecks a year. Bi-weekly pay schedules include “bonus” checks, meaning that twice a year, employees receive a third monthly paycheck (during the months that have five weeks instead of four), increasing their monthly take-home pay. This can make it easier to meet savings goals or to pay off extra debt in those months. In many cases, employees on a bi-weekly pay schedule will be paid on the same day of the week making it easy to plan around payday.
If your employer pays semi-monthly, you will receive your paycheck on the 15th of the month and again on the 30th (or final day) of the month. This adds up to 24 paychecks a year. Since the 15th and the 30th of the month will always fall on different days of the week, it makes it tricky to plan around your payday. Your pay day could fall on a Saturday, meaning your funds may not be available for use until the following Monday.
Inquiring about your company’s pay schedule in advance can help you plan your budget accordingly so that you can pay bills on time.
Is Direct Deposit Available?
This question is a good one to ask since it involves how you receive your paycheck. More and more employers are offering direct deposit to their employees as a convenient way to distribute paychecks. This method of payment is more efficient and extremely convenient to you since you don’t have to be in the office to receive your paycheck. If you are on vacation or are home sick from work on payday, you will still receive your paycheck automatically.
Furthermore, you don’t have to bring a paper check to the bank and stand in line to deposit your paychecks. Additionally, you can select where your funds go. You can choose to split your paycheck between multiple accounts such as a retirement savings plan, a savings account, and your checking account.
What Are My Retirement Options?
Oftentimes, it’s difficult to think about retirement when starting your first job. Retirement is something that ideally happens much later in life, and people think they can push this off until years down the road. The sooner you start saving for retirement, the less you have to contribute over time. Conversely, if you wait until the last minute to start saving, you will have to contribute much more in order to have a suitable retirement income.
Start your future on the right foot by asking what type of employer-sponsored retirement plan is offered. There are numerous plans, but the most popular are outlined here. You should also find out if your employer matches contributions. If they do, determine how much (this is usually a percentage of your salary) as well as how often contributions are made. Unfortunately, not all companies offer employer-sponsored retirement plans. This is something you should be aware of so you can plan your retirement savings accordingly.
Can I Contribute to a Flex Spending Account for Medical/Dental Expenses that are Not Paid or Reimbursed by Insurance?
Find out if your employer offers the option to contribute to a Flexible Spending Account (FSA). This is an employee benefit that allows you to set aside money, for medical expenses, from your paycheck before taxes are taken out. The overall goal of an FSA is to help employees save money on inevitable healthcare costs. Contributions are not subject to federal and state income tax nor is it subject to FICA and Medicare tax withholdings. While not all employers offer flexible spending accounts to their employees, there are other ways to save for unexpected medical expenses.